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The valuation of cash holdings and its tax implications


The allocation of value between land and non-land assets has direct duty and capital gains tax (CGT) implications. What is required for duty purposes is the apportionment of the market value of the whole going concern entity between land and non-land assets to assess whether the relevant duty threshold has been exceeded.

For CGT purposes, the value apportionment between land and non-land assets is required for a principal asset test to assess Australian CGT payable by foreign residents. In this article, the authors discuss relevant valuation principles, and conclude that a value apportionment exercise conducted for duty and CGT purposes warrants more complex and lateral valuation thinking than does the normal total value assessment exercise undertaken for the purposes of the underlying commercial transaction. Unfortunately, the necessary shift in valuation thinking when the focus of valuation changes from total value assessment to value apportionment has received little attention in practice, and there are likely to be negative flow-on duty and CGT implications.

Author profiles

Dr Hung Chu
Hung is a Director of Lonergan Edwards & Associates Limited. Dr Hung Chu completed his master degree in Finance and Banking (with Merit among the top 2% of graduates) from the University of Sydney and his doctoral degree in Finance from the University of Technology, Sydney (graduated on Chancellor's List for Exceptional Scholarly Achievement in PhD research). He has 12 years of experience in the provision of valuation services and numerous technical papers published in academic and practitioners' journals. - Current at 01 June 2016
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Wayne Lonergan
Wayne is an internationally distinguished practitioner with over 40 years valuation experience in takeovers and mergers, litigation including loss assessment, tax, stamp duty and other regulatory purposes. Wayne is the author of two leading valuation texts and over 100 published technical papers in various leading industry journals. - Current at 01 July 2015
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